ABSTRACT
Professional indemnity insurance developed to provide indemnity to the insured in respect of damages awarded against him/her as a result of their failure to exercise reasonable care in the performance of their duties owed to a third party. The law recognises three scenarios for liability arising from tortious behaviour on the part of a director in his/her dealings with a third party: the company alone faces liability; the company and the director are jointly and severally liable; or the director alone is liable. The leading decision is that of the House of Lords in Williams v. Natural Life Health Foods Ltd. Personal liability for misrepresentation under the principles set out in Williams is perhaps the main purpose to which D&O policies in England are directed since it is the only area in which the company director is personally exposed to the real risk of a third party claim.
